D.C. Circuit rules recess appointments unconstitutional

The National Labor Relations Board (NLRB) issued a flurry of controversial decisions just prior to the expiration of Republican Board Member Brian Hayes’ term on Dec.16, 2012. The haste to wrap up key cases reflected the reality that Hayes’ departure left the board with uncertain prospects for maintaining the required quorum of three members in 2013.

The appeals court ruling, if not overturned, would leave the five-member labor board with just one validly appointed member, Chairman Mark Pearce, which many observers believe effectively shuts down the board’s appellate decision-making power. It also could invalidate all the board’s 2012 rulings.

“Assuming that the recess appointments remain invalid, the only legitimate board member left is Chairman Pearce, and his term [which ends Aug. 27] may expire before the Supreme Court has a chance, as it surely will, to decide this case,” says James Walters, a Fisher & Phillips partner. “Things look fairly bleak for this government agency at this point.”

That prospect cheers many management-side employment lawyers because President Obama’s Democratic appointees have taken an aggressive approach to protecting workers’ rights in both union and nonunion workplaces. The December opinions were no exception. In cases involving nonunion employers, the board majority found that firing workers for Facebook postings about a fellow employee and a mandatory arbitration program both violated employees’ Section 7 rights.

Other December actions continued the board’s consistent string of pro-union decisions in disputes involving organized workplaces, including overturning three decades of precedent to give unions the right to witness statements taken during the course of an internal investigation.

Protected Posts

In Hispanics United of Buffalo, the board, with only Hayes dissenting, found that a nonprofit unlawfully terminated five employees because of their derogatory Facebook comments about a co-worker. The employer said the workers had violated its anti-harassment policy. But the board majority said the posts were protected activity showing the employees were “taking a first step towards taking group action,” because they believed the employee they criticized would report them to management.

Hayes, who is now a shareholder at Ogletree Deakins, says the decision raises the question of where the board will draw the line on what constitutes protected activity under Section 7.

“I made the point in my dissent [in Hispanics United] that not all shoptalk between employees, whether face to face or over the Internet, is necessarily concerted activity under Section 7,” he says. “In order to fall within the ambit of Section 7, it must be both concerted and engaged in for mutual aid and protection. That last part means that the activity has to be preliminary to or contemplate present or future group action in furtherance of mutual aid and protection. The question in this case was whether the second analytical prong was met.”

Arbitration Action

In another Section 7 case, Supply Technologies, LLC, the board ruled against a nonunion employer who had instituted a mandatory grievance arbitration program. The majority found that employees could reasonably interpret the program as precluding them from filing NLRB charges.

The employer argued that the arbitration agreement stated that employees could file charges with government agencies. But the board found that language too broad, saying employees could reasonably construe the agreement as prohibiting their NLRB claims because it required them to use the program to bring a claim “of any kind.”

Hayes, who dissented, says the case reflects “the continuing antipathy of the board to private dispute resolution mechanisms in a nonunion setting,” despite recent Supreme Court decisions upholding arbitration. He adds that in-house counsel should look at the language of their employee arbitration agreements in light of the majority decision and consider whether changes are needed.

Investigation Impediment

Although some cases affected nonunion workplaces, the board continued to expand union rights at organized companies. Overturning a 34-year precedent, the NLRB held that an employer may be required to turn over to a union witness statements obtained during an internal investigation of workplace misconduct unless there is a “legitimate and substantial confidentiality interest” that outweighs the union’s need for the information. American Baptist Homes of the West d/b/a Piedmont Gardens raises concerns over whether employees will refuse to cooperate with internal investigations when they realize their identity may be revealed to the union, which likely will share it with the employee being investigated.

“Witness statements are usually obtained under a promise of confidentiality because rank and file employees are reluctant to speak about a fellow employee’s misconduct unless they have some cover,” Walters says. “This is a totally unnecessary decision overruling decades of perfectly good precedent.”